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JMU OSP

 

Budgeting Basics

Budget Preparation
Budgetary Concerns
Potential Costs
Budget Justification
Budget Items
Rate Information
OMB Circular A-21 Basic Consideration

Budget Preparation

The Office of Sponsored Programs will assist in the preparation of the proposed budget, which is an estimate of the costs necessary to satisfy the project's objectives. While preparing the technical proposal, the Principal Investigator should begin to estimate the costs of the various components of the budget.

It is essential that a draft budget be provided to OSP as soon as possible so that the OSP staff may provide assistance with the correct fringe benefits and indirect costs. Budget format and information on items to be considered when preparing a budget are available through OSP.

Salaries

These should be in accordance with the University's pay plan (base contracted rate) including pay of faculty, and classified employees. All salaries require fringe benefits, which are discussed below.

Fringe Benefits

All projected full-time salaries requires the inclusion of the University's contribution to fringe benefits (i.e. retirement, social security, health insurance, etc.) The rates are available from OSP and are published through the Office of Budget Management.

Other Personnel Services

This category includes undergraduate students, graduate students, temporary help, and student assistants who are paid by the hour. All personnel employed through externally funded projects require that fringe benefits be projected in the budget submission. The fringe benefit rate for part-time personnel is calculated on the employer's share of FICA. These rates are available from both OSPA and the home page.

Supplies

These costs should be carefully estimated. Sometimes the agency requires a detailed listing of all supplies along with a price breakdown. Check the guidelines carefully to verify if this is needed.

Equipment

Only items of acquisition cost of $5,000 or more per unit should be listed in this category. If below this threshold, they are considered "Supplies & Materials." All equipment to be purchased must be justified, estimates should be obtained from vendors, and Procurement should be contacted in case bidding procedures are necessary. Check to see who retains possession of the equipment at the end of the project. Many agencies will retain possession and the equipment will have to be returned.

Consultants

May be justified when the project requires expertise of a specialized nature for a certain period of time. Consultants should only be budgeted for those instances where expertise is not available on campus. Payroll will make the determination.

Travel

Most agencies want to know where you are going, the propose and the cost. When travel to professional meetings to present papers on the project is required, remember to allow funds for those collaborating on the project. All travel costs should be calculated on the least expensive means of travel. Check agency guidelines carefully to make sure that travel expenses are allowed and for any special requirements they may have. Some agencies do not allow or restrict international travel.

Travel Requirements

M&IE Rate Table

F & A Costs (Indirect Costs/Overhead)

F & A costs refer to expenses that are necessary to the execution of a sponsored project, but that cannot be directly affixed and charged to the project. This rate is negotiated between the University and their Federal Cognizant Agency. Our cost Rate Agreement is determined by the U.S. Department of Health and Human Services. F & A rates for research and training projects are different and are calculated differently. The rates are available from OSP.

Negotiated Indirect Cost Rate Agreement (NICRA)

Cost Sharing

In some cases, cost sharing, or match, is required by the agency. Cost sharing can be voluntary or involuntary. It is imperative that you become aware of such requirements in order to meet the specific needs of the agency and that you have the written approval of your Dean and/or Department Head for any promised match. This is an integral part of the Internal Approval Form.

Types of cost-sharing (.doc)

Other Expenses

If the proposed project includes meals it must be clearly stated in the budget. A detailed breakdown per participant must also be included.

Make sure that you accurately estimate for data collection, final report preparation, and publication costs. All costs must adhere to the funding agency's guidelines. Check your budget to ensure that it adds up.

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Budgetary Concerns

Budget Development and Clearance

Do the budget and the narrative coincide? Will the program be covered by the costs? From which part of the institution are the personnel coming? Have the individuals been approved for submission? Were agency guidelines adhered to and/or followed in the cost listing? Do the facilities, as they are described in the proposal, currently exist?

Proposal Type and Sponsoring Agency

Is the purpose of the proposal clearly stated (product development, training, research, etc.)? Is the sponsoring agency stated and is there a correlation to the outcome? Has this program been funded before? If so, by who and how much? How much is allocated to the funding cycle?

Cost Sharing

Have all cost sharing requirements set by the agency been considered and adhered to? Will the outcome of this proposal be a contract or a grant (i.e., is this work for hire or a Principal Investigator's (PI) own research project)? Are the costs being shared "in cash" or "in kind" monies? Where will the cost sharing funds come from? Can the cost sharing be documented or verified?

Cost Sharing Request Form (.doc)

Collaborating Institution(s)

Are the institutions you are collaborating with financially secure and reputable? Has each institution been given the proper authorization for participation and budgeting? Are the collaborating institutions(s) responsibilities clearly outlined? Are the cost accounting standards in alignment with the budget? Have you confirmed its independent status through the PI and/or your own institution?

Collaboration Checklist

Personnel

Is the selected PI qualified to direct programs at your institution? Does the PI have time for the project? Is it consistent with his/her academic duties? Does the time on the budget accurately reflect the narratives description of activity? Are the personnel selected employed by the institution? If not, are personnel policies being followed? Are those listed as key personnel in fact key to the project?

PI Eligibility

Consultants

Are the individuals listed as consultants employees of your institution? Is the individual really needed as a consultant? Does the time commitment reflect the IRS definition of consultant? Are the sponsors limits aligned with on the per diem rates?

Travel

Is there a distinction between domestic and foreign travel as stated by the agency? Is the travel properly substantiated? Are the sponsors limits aligned to for per diem rates? Does the agency require that you travel only with American carriers?

Travel Requirements

M&IE Rate Table

Equipment

Does the equipment you require already exist on campus? Does the agency define it as capital equipment? Are there special space or environmental requirements for the equipment? Have all secondary costs been considered (installation, renovation, and maintenance)?

Other Costs

Has computing time been factored into the proposal? Are there human subjects and will they be reimbursed? Will research students (graduate student assistants) require tuition remission? Has the budget allowed for long-distance telephone and postage costs, if necessary? Will there be animals involved, and if so, are their care costs considered?

Facility and Administrative Cost (Indirect Costs)

Is the calculation of the Facility and Administrative cost (F&A) consistent with your institution's federally negotiated base and rate? If sponsor has limited indirect cost recovery, have you redirected appropriate items into direct cost line? Is there an institutional policy regarding F&A cost recovery? Is there a clear distinction between on- and off-campus activities? In exceptional circumstances (when a determination has been made to waive a portion or all of the F&A costs), have you ascertained that there are no incremental costs to the institution (will your accounting system accommodate the rate, are special facilities required, are special support services required, or are there offsetting circumstances)?

Negotiated Indirect Cost Rate Agreement (NICRA)

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Potential Costs in a Sponsored Project

Personnel
Faculty members, academic year, and off-quarter
Research assistants and associates
Postdoctoral associates
Graduate Students
Undergraduate assistants
Secretaries
Interviews and evaluators
Computer programmers

Fringe Benefits
Contributions to the State of Virginia Retirement systems for faculty and staff medical, dental, and life insurance, etc.
FICA @ 7.65%

Trainee Costs
Stipends and allowances
Tuition and fees
Travel
Project supplies

Consultant Costs
Honorarium or consulting fee
Travel and lodging
Supplies

Equipment
Fixed, movable, and shared equipment that meets the University's definition for equipment

Material & Supplies
Animals including purchase, shipping, housing and maintenance
Lab supplies such as chemicals, glassware, disposables, etc.
Office supplies, questionnaires, and test materials
Small equipment items such as Bunsen burners, free-standing lights, and specialized trays, etc.
Materials for equipment fabrication
Instructional materials

Travel
Attendance at professional meetings, including air fare or mileage, hotel and meal costs, and registration
Field work, including vehicle or airfare, mileage charges, field station fees, and living expenses
Travel to sponsor required meetings or to consult with expert(s)
Local travel for interviewers, outreach personnel
Mileage and parking
Meal reimbursements
M&IE Rate Table

Computer Costs
CPU time
Data storage
Connect time

Subcontracts
Costs for parts of the project/study to be performed at other institutions

Alterations
Extensive building changes

Other Direct Costs
Copying and printing costs
Publication costs, including photographic and graphic services and page charges
Equipment maintenance, repair, and service contracts
Telephone and Fax charges
Human subject fees
Space and equipment rental

Facilities and Administrative (F&A) Costs (Indirect Costs)
Real institutional costs that cannot be directly allocated to a project
(Your Sponsored Programs Administration office will advise you on the appropriate negotiated Facilities and Administration [indirect cost] rate.)
Current Federal Negotiated Indirect Cost Rate Agreement

Cost Sharing
Voluntary or mandatory
All cost-sharing must be verifiable

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Budget Justification

Justify all Personnel
How does each individual contribute to the project?
Describe each person's specific functions in the project.
If some individuals are not yet named, make sure to describe necessary qualifications for said individuals.

Explain and justify annual increases in budget items/categories.

Justify all Travel
Explain the purpose of the trip and justify those traveling.
Based on actual meeting places, estimate expenses.
Determine travel destinations and estimated costs.
Stipulate that costs are based on shared room, tourist class, etc.
Use an American air carrier.

Explain all other expenditures.

Identify any significant increases in any category over the first 12-month budget period. Identify such significant increases with asterisks against the appropriate amounts.

For Example:
"Other Expenses is increased by an additional $500 (above annual 4% increase) in year 03 to pay for maintenance of our specialized microscope (purchased in 20xx)."
If you ask for a new piece of equipment in year 03, explain why you do not need it sooner.
Or state, (e.g.): "No additional equipment is requested in subsequent years."
Be straightforward in your justifications. The reviewers can pick up on an applicant trying to sneak something by them (whether the applicant realizes they are doing it or not).

*Please ask OSP for samples of budget justifications as a template.

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Budget Items

Personnel
List the contribution of each person to project (PI, collaborating investigator, etc.) (Describe specific functions in budget justification).
Describe the type of appointment (months); for appointments that are less than full-time, put an asterisk next to the duration of months and give a complete explanation in the justification; if your institution divides a 12-month year by academic and summer periods, describe for each period the types of appointments and state them on separate lines.
Describe the percent of effort on the project.
Include Institutional base salary
List the PI first; followed by any collaborating investigators, trainees and support staff.
All personnel should be listed, even if there is no salary requested.

Consultant Costs
Whether or not costs are involved, give names and organizational affiliations of involved consultants.
State the number of days of prospective consultation, estimated rate of compensation, travel, and other related costs.

Equipment
For acquisition costs greater than $5000 include them under equipment; watch for conflicts with "Facilities Available." For costs less than $5000 include in the supplies & materials line.

Supplies
Categories in amounts less than $1,000 need not be itemized.

Other Expenses
Repairs
Office supplies
Postage
Rental and leases
Fees for services
Publication costs (drafting, photographs, page charges, reprints)
Books
Computer charges
Service contracts

Budget for Total Project Period
Include annual raises for personnel. (4% merit increases, 3% for NIH)
Merit
Promotion
Estimate changes in fringe benefit rate.
Include inflation as part of your estimates.
Using institutional guidelines, determine percentages needed to calculate any increases.
Consider new expenses that may arise as the project progresses-repairs, replacements, any new experiments that require supplies not readily available.
Identify with an asterisk (*) any significant changes in any category, including personnel effort, over the projected budget period. Explain all changes in your Budget Justification.

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Rate Information - James Madison University

Click here for a PDF version of the rate card.

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OMB Circular A-21 Basic Considerations

C. Basic Considerations

  1. Composition of total costs.
    The cost of a sponsored agreement is comprised of the allowable direct costs incident to its performance, plus the allocable portion of the allowable F&A costs of the institution, less applicable credits as described in subsection 5.
  2. Factors affecting allowability of costs.
    The tests of allowability of costs under these principles are: (a) they must be reasonable; (b) they must be allocable to sponsored agreements under the principles and methods provided herein; (c) they must be given consistent treatment through application of those generally accepted accounting principles appropriate to the circumstances; and (d) they must conform to any limitations or exclusions set forth in these principles or in the sponsored agreement as to types or amounts of cost items.
  3. Reasonable costs.
    A cost may be considered reasonable if the nature of the goods or services acquired or applied, and the amount involved therefore, reflect the action that a prudent person would have taken under the circumstances prevailing at the time the decision to incur the cost was made. Major considerations involved in the determination of the reasonableness of a cost are: (a) whether or not the cost is of a type generally recognized as necessary for the operation of the institution or the performance of the sponsored agreement; (b) the restraints or requirements imposed by such factors as arm's-length bargaining, Federal and State laws and regulations, and sponsored agreement terms and conditions; (c) whether or not the individuals concerned acted with due prudence in the circumstances, considering their responsibilities to the institution, its employees, its students, the Federal Government, and the public at large; and, (d) the extent to which the actions taken with respect to the incurrence of the cost are consistent with established institutional policies and practices applicable to the work of the institution generally, including sponsored agreements.
  4. Allocable costs.
    • A cost is allocable to a particular cost objective (i.e., a specific function, project, sponsored agreement, department, or the like) if the goods or services involved are chargeable or assignable to such cost objective in accordance with relative benefits received or other equitable relationship. Subject to the foregoing, a cost is allocable to a sponsored agreement if (1) it is incurred solely to advance the work under the sponsored agreement; (2) it benefits both the sponsored agreement and other work of the institution, in proportions that can be approximated through use of reasonable methods, or (3) it is necessary to the overall operation of the institution and, in light of the principles provided in this Circular, is deemed to be assignable in part to sponsored projects. Where the purchase of equipment or other capital items is specifically authorized under a sponsored agreement, the amounts thus authorized for such purchases are assignable to the sponsored agreement regardless of the use that may subsequently be made of the equipment or other capital items involved.
    • Any costs allocable to a particular sponsored agreement under the standards provided in this Circular may not be shifted to other sponsored agreements in order to meet deficiencies caused by overruns or other fund considerations, to avoid restrictions imposed by law or by terms of the sponsored agreement, or for other reasons of convenience.
    • Any costs allocable to activities sponsored by industry, foreign governments or other sponsors may not be shifted to federally-sponsored agreements.
    • Allocation and documentation standard.
      1. Cost principles. The recipient institution is responsible for ensuring that costs charged to a sponsored agreement are allowable, allocable, and reasonable under these cost principles.
      2. Internal controls. The institution's financial management system shall ensure that no one person has complete control over all aspects of a financial transaction.
      3. Direct cost allocation principles. If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost should be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved, then, notwithstanding subsection b, the costs may be allocated or transferred to benefited projects on any reasonable basis, consistent with subsections (1) and (2).
      4. Documentation. Federal requirements for documentation are specified in this Circular, Circular A-110, "Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations," and specific agency policies on cost transfers. If the institution authorizes the principal investigator or other individual to have primary responsibility, given the requirements of subsection d.(2), for the management of sponsored agreement funds, then the institution's documentation requirements for the actions of those individuals (e.g., signature or initials of the principal investigator or designee or use of a password) will normally be considered sufficient.

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